UK: Berry Bros & Rudd profits slip on charges

• Full-year profits fall on Cutty Sark, Spain charges
• Hopes for lift from Bordeaux 2009 vintage
• Plans more spirits brand launches

Wine and spirits merchant Berry Bros & Rudd has reported a fall in full-year profits and plans to sacrifice earnings growth over the medium-term in order to reposition the business.

Berry Bros & Rudd saw net profits slip to GBP3.7m (US$5.8m) for the 12 months to the end of March, compared to GBP4.8m in the previous year. The UK-based wine merchant said that earnings were damaged by one-off charges of GBP1.2m and GBP0.6m relating to distribution changes in Spain and the sale of Cutty Sark Scotch whisky respectively.

Sales from continuing operations dropped by GBP1m to GBP253m for the year, reflecting lower demand for fine wine during the global economic downturn.

"Our wine business is holding firm through difficult times," said Berry Bros' chairman, Simon Berry, in accounts filed by the company earlier this month. "We are hopeful that our wine business will have the benefit of another major en primeur Bordeaux campaign this year," he added. The 2009 Bordeaux vintage has been heralded as one of the best in a generation.

Berry said that the merchant "looks to the future with confidence", but warned that the firm plans to curtail profits in order to invest behind new brands and overseas business, particularly in Asia. 

"The focus of the company is now more entreprenurial where the objective over the next few years is to grow the trading assets of the business," said Berry. Shareholders in the private, family-owned group "should expect lower levels of profitability" in the medium-term, he said.

Berry Bros plans to invest behind brands such as newly-acquired Glenrothes single malt Scotch whisky and No.3 gin. It is also preparing more launches this year. 

Proceeds from the sale of Cutty Sark to Edrington Group will be used to back Berry Bros' new-look spirits portfolio. The firm added that the sale, completed on the first day of the company's new financial year, has "significantly strengthened" its balance sheet.